First – What is a short sale? Many people know, but not everyone.
When a person owes more on a property than it is worth, and they ask the bank to accept less than is owed on the property so that they can sell it, this is known as a short sale. Like when you owed your friend $50, but you only had $30 of it and you said, “sorry Mike, I’m a little short” and Mike said, “don’t worry about it”.
Why not buy short sales?
There are a variety of reasons why short sales do not go through. Here are 4;
1. The process of dealing with the banks on a short sale requires skill, effort and knowledge on the part of the listing agent (the person the seller hired to sell the house). Many do not possess this trifecta of assets.
2. There must be a hardship. Many sellers just want to sell short because their neighbor did, but their neighbor lost their job, or was never earning enough money to afford the home in the first place. Just because you want to, doesn’t mean you can.
3. If they buyer does have a legitimate hardship, then, that buyer, who is already (typically) despondent over their current financial situation, is required by the bank to go through their finances with a fine tooth comb to prove that hardship. Many people just don’t have the stomach for it.
4. Patience (or lack thereof). Short sales often take a very long time to get accepted. I’ve seen them take more than 4 months just to get approved. Many buyers just aren’t that patient.
In the month of April, 2009 in Las Vegas, 36% of the properties listed for sale were short sales. Only 6% of the closings were. This shows that short sales can work, but often (1 in 6 times that month) they don’t.
The prices on Las Vegas bank owned homes are mind-boggling. Don’t wait for the bottom. You can’t predict it. You won’t know where the bottom was until it’s gone. Really. What are you waiting for? If you would like information about buying a home to live in or an investment property in Las Vegas, with no cost or obligation, please contact me.
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